WASHINGTON (Reuters) - Two former executives of Roadrunner Transportation Systems Inc were charged in an indictment unsealed on Friday for allegedly participating in an accounting and securities fraud scheme that resulted in a loss of more than $245 million in shareholder value, the U.S. Justice Department said.
Mark Wogsland, 53, and Bret Naggs, 52, both of Cedarburg, Wisconsin, were charged with three counts of securities fraud and other violations for allegedly carrying out a scheme between 2014 and 2017 to mislead the company’s shareholders, auditors, regulators and the investing public, the department said in a statement.
According to the indictment, beginning in 2014 Wogsland and Naggs and their co-conspirators identified at least $7 million in overstated accounts on the balance sheet of one Roadrunner’s operating companies.
But instead of writing off the full amount they developed a plan to adjust the balance sheet by small sums each month to conceal the extent of the misstated accounts, it said.
Roadrunner eventually restated its financial results in 2017 and 2018. The loss in shareholder value resulting from the drop in its share price in three trading days after the two announcements totaled $245 million, the statement said.
Roadrunner said in a statement that it was fully cooperating with the Justice Department and the Securities and Exchange Commission in their investigation into events leading to restatement of the company’s results.
It said the company had taken “corrective actions” since restating results last year, including replacing the former management team and hiring new financial leaders.
Reporting by Mohammad Zargham; editing by Eric Beech, James Dalgleish and Diane Craft